DWP Offshoring U-Turn a Pyrrhic Victory for British IT Workers

It's a week now since technology giant Hewlett Packard (HP) tore up their plan to send 200 IT support jobs for the Department for Work and Pensions (DWP) offshore to India. Faced with the target of a 40 per cent cut in department costs it seems the DWP was willing to 'offshore' the jobs to a lower cost location, but as the celebrations die down have any jobs really been saved?

Back in July, HP workers had already started to train their replacements - a team from Bengaluru (formerly known as Bangalore). North Tyneside MP, Mary Glindon, tabled an Early Day Motion stating that the House had been "alarmed at the increased security risks of storing millions of live personal data files, including national insurance numbers, offshore."

Naturally enough, other local MPs supported the motion and the Public and Commercial Services union (PCS) spearheaded a protest that included HP employees, the media, and the support of the general public - after all, who would actively support firing Geordies and replacing them with IT workers based 7,000 miles away?

But the assumption in all of the union protest and ministerial hand wringing has been that the British government does not already use taxpayer funds to hire workers overseas to deliver technology services that were once delivered locally.

When the coalition government was established last year they hauled every major IT supplier over the coals. Contracts were renegotiated, prices were driven down, and the chief executives of all those companies emerged from the Cabinet Office looking sheepish - wondering how on earth they could continue to deliver services to the government when their budgets had just been slashed.

What do you think they did first?

Well, if I were running a major international technology supplier such as Capgemini, IBM, Atos Origin, CSC, or Siemens, I'd be exploring how to carry on delivering the same for less. And all those companies have a global footprint with highly skilled employees available to work on projects from Asia - or other lower cost locations.

I'm not suggesting that every government IT supplier has been covertly letting people go in the UK and silently transferring projects offshore, but we have moved on from an age when everything a company does is conducted within the four walls of the head office. These service companies are now global.

Take the company in question, HP. They have around 324,600 employees on the payroll, and probably many more if temporary staff and contractors are included. Now consider the Tyneside 200 as a percentage of that total - it's a tiny 0.06 per cent of the company workforce.

Then consider further that HP operates in over 170 countries. Moving 200 jobs from the UK to India isn't offshoring for HP. What is offshoring when you have employees in nearly 200 countries anyway?

This is just delivering what customers in any one of those 170 countries want - delivered from any combination of the other countries. Sometimes a service may be delivered locally, sometimes it may be entirely remotely, and sometimes it may be a mix.

Shifting tasks around a global workforce in a company this size is just like squeezing a tube of toothpaste; reducing the team in one location means more hiring in another. Services have globalized in the same way manufacturing did, but intellectual services can be delivered in an instant rather than weeks later via an enormous container ship.

It is easy to understand the raw emotion that drives protests against offshoring, but the media and unions waste too much time and energy fighting a losing battle. Automation, and ongoing technological improvement, destroys many more jobs than offshoring.

Are the IT support workers breaking their keyboards in protest as 'cloud computing' forces them into redundancy, or are these protests reserved only when an easy target can be seen? Progress is amorphous and hard to fight and these difficult changes are a direct result of progress in the IT industry.

This government is already offshoring skilled work, such as IT, to overseas locations and it's not coming back. Even if questions are asked in the House, contracts can be sub-contracted and sub-sub-contracted until it is impossible to trace who is delivering what.

We should all be focused on making IT in the UK more attractive for global firms, so the IT service companies want to hire in Britain - highly technical services don't always go to the lowest cost location and (in case you forgot) the UK still exports more IT than it imports. The PCS won a pyrrhic victory on Tyneside - in future they need to focus on the global war for talent, not local battles for jobs.